IMF-在全球竞争加剧的情况下欧洲转向电动汽车-2024-10-新能源

Europe’sShifttoElectric

VehiclesAmid

IntensifyingGlobalCompetition

PhilippeWingender,JiaxiongYao,RobertZymek,BenjaminCarton,DiegoCerdeiro,andAnkeWeber

WP/24/218

IMFWorkingPapersdescriberesearchin

progressbytheauthor(s)andarepublishedtoelicitcommentsandtoencouragedebate.

TheviewsexpressedinIMFWorkingPapersare

thoseoftheauthor(s)anddonotnecessarily

representtheviewsoftheIMF,itsExecutiveBoard,orIMFmanagement.

2024

OCT

©2024InternationalMonetaryFundWP/24/218

IMFWorkingPaper

EuropeanandResearchDepartments

Europe’sShifttoEVsAmidIntensifyingGlobalCompetition*

PreparedbyPhilippeWingender,JiaxiongYao,RobertZymek,BenjaminCarton,DiegoCerdeiro,andAnkeWeber

AuthorizedfordistributionbyOyaCelasunandRafaelPortilloOctober2024

IMFWorkingPapersdescriberesearchinprogressbytheauthor(s)andarepublishedtoelicit

commentsandtoencouragedebate.TheviewsexpressedinIMFWorkingPapersarethoseofthe

author(s)anddonotnecessarilyrepresenttheviewsoftheIMF,itsExecutiveBoard,orIMFmanagement.

ABSTRACT:Europeancountrieshavesetambitiousgoalstoreducetheircarbonemissions.Thesegoals

includeatransitiontoelectricvehicles(EVs)—asectorthatChinaincreasinglydominatesglobally—which

couldreducethedemandforEurope’slargeandinterconnectedautosector.Thispaperaimstosizeupthe

tradeoffsbetweenEurope’sshifttowardsEVsandkeymacroeconomicoutcomes,andanalyzewhichpoliciesmaysharpenoreasethem.Usingstate-of-the-artmacroeconomicandtrademodelsweanalyzeascenarioinwhichtheshareofChinesecarsinEUpurchasesrisesby15percentover5yearsasaresultofbothapositiveproductivityshockforcarproductioninChinaandademandshockthatshiftsconsumerpreferencestowardsChinesecars(givenChina’sdominanceintheEVsector).WefindthatfortheEUasawhole,theGDPcostofthisshiftissmallintheshortterm,intherangeof0.2-0.3percentofGDP,andclosetozerooverthelongterm.Adverseshort-runeffectsaremoresignificantforsmallereconomiesheavilyreliantonthecarsector,mainlyinCentralEurope.Protectionistpolicies,suchastariffsonChineseEVs,wouldraisetheGDPcostoftheEV

transition.AfurtherincreaseinChineseFDIinflowsthatresultsinasignificantshareofChineseEVsbeingproducedinCentralEuropeaneconomies,ontheotherhand,wouldoffsetlossesintheseeconomiesbysupportingtheirshiftfromsupplyingtheinternalcombustionengine(ICE)productionchaintothatofEVs.

RECOMMENDEDCITATION:Wingender,Philippe,JiaxiongYao,RobertZymek,BenjaminCarton,Diego

Cerdeiro,andAnkeWeber,“Europe’sShifttoElectricVehiclesAmidIntensifyingGlobalCompetition,”IMFWorkingPaper24/218.

JELClassificationNumbers:

D57,D58,F10,F13,Q58

Keywords:

Electricvehicles;greentransition;trade;tariffs;globalvaluechains.

Author’sE-MailAddress:

pwingender@;jyao@;rzymek@;bcarton@;dcerdeiro@;aweber@

*WethankHelgeBerger,OyaCelasun,GeoffroyDolphin,GeoffGottlieb,Pierre-OlivierGourinchas,PetyaKoevaBrooks,KrzysztofKrogulski,NatalijaNovta,RafaelPortillo,GregorSchwerhoff,PetiaTopalova,YizhiXu,andparticipantsatIMFEuropeanand

ResearchDepartmentseminars,forveryhelpfulcommentsandsuggestions.EstefaniaCohnBechprovidedexcellentresearchassistance.

Contents

1.Introduction 4

2.Lettingthepastandthepresentinformpossiblescenarios 8

2.1.Japan’sRiseinthe1960-1980s 9

2.2.China’sRiseinthe21stCentury 9

2.3.Puttingitalltogether 11

3.ModelSpecificationandScenarios 12

3.1Briefsummaryofmodelsused 12

3.2Scenarios 14

4.SimulationResults 15

4.1The“EV-Shock” 15

4.2Protectionistresponsescenarios 20

4.3IncreasedFDIinflowsscenario 22

5.ClimateImplications 23

6.Conclusion 24

References 26

AnnexI.TheJapaneseExperience:Lessonsfrompaststudies 30

(i)Therolesofsupplyanddemandshifts 30

(ii)Japan’sgovernmentsupport 31

(iii)Protectionistpolicyresponsesstartinginthe1980s,andtheirconsequences 32

(iv)TheJapaneseFDIresponse,anditsimpact 33

AnnexII.StructuralModelDescriptions 35

(I)TheGVC-GIMFModel 35

(II)TheTradeModel 37

AnnexIII.TheEVShareofAutomotiveSalesandEmissionsImplications 39

(I)TheEVShareofAutomotiveSales 39

(II)EVAdoptionandEmissions 40

4

1.Introduction

TheEuropeanUnion(EU)hassetambitiousandmuch-neededclimategoals,withtheultimateobjectiveof

makingitseconomyclimateneutralbythemiddleofthiscentury.Theseplansincludearapidtransitionto

electricvehicles(EVs).InMarch2023theEuropeanCommissionsetouttargetsforemissionreductionsfromcars,aspartofits“Fitfor55”package.TheneedforEuropetoenhanceitsenergysecuritybylimitingits

dependenceonfossilfuelimports,andchangingconsumerpreferencesarealsocontributingtotheshifttowardsEVs.1Currentregulationsrequirea55percentreductioninCO2emissionsfornewcarsand

50percentfornewvansfrom2030to2034comparedto2021levels,and100percentCO2emission

reductionsforbothnewcarsandvansfrom2035.Tomeetthesetargets,third-partyestimatessuggestthat

salesofbatteryEVcarsintheEUmustmakeuparound65percentoftotalnewcarsalesby2030andthatby2035allnewcarsalesshouldbefullyelectric(Figure1).Withfullyelectricvehiclesalescurrentlyaccountingforabout15percentoftotalcarsalesinEurope,thisrepresentsaquantumleap.WhileEuropeisoneofthe

world’slargestautomanufacturers,ithasyettogaincompetitivenessintheproductionofEVs,havinginvestedheavilyininternalcombustionengine(ICE)technologies.TheEUhasalsoseenanincreaseintheshareof

EVsproducedinChina,whichsuppliedmorethan20percentofnewbattery-electriccarspurchasedintheEUin2023,upfromjustbelow3percentin2020(ACEA,2024).GiventheimportanceofthecarsectorformanyEuropeaneconomies,itisnaturaltoaskabouttheeconomicimplicationsoftheshifttowardsEVsinthe

continent.Thispaperusesstate-of-the-artmodelstostudythemacroeconomicimplicationsofEurope’stransitiontoEVs,andhowpoliciescaneaseorsharpenanytradeoffs.

TheEVsectorisonethatChinaincreasinglydominates,includinginkeysegmentsofthesupplychainsuchasbatteries(Duthoit,2023).WithinChina,EVsalreadyaccountforaboutathirdofdomesticvehiclesales,making

upmorethanhalfofglobalEVsales.Thesignificanttake-upofEVsinChinahasbeenspurredbythe

availabilityofcheapEVs,withthesales-weightedaveragepriceofelectriccars(beforepurchasesubsidy)

alreadybeinglowerthanthatofinternalcombustionengine(ICE)cars(IEA,2024).China’sincreased

productioncapacityhasonlyrecentlystartedtranslatingintoameaningfulamountofEVexports,andthetrendisexponential,withexportsmorethanquadruplingoverthelastthreeyears.In2023,Chinaexportedover4

millioncars,makingitthelargestautoexporterintheworld,ofwhichaboutone-thirdwereelectric(IEA,2024).TheEUisChina’slargestexportmarket.In2023,21.7percentofbattery-electriccarsalesintheEUwere

madeinChina,ofwhichChinesebrandsaccountedfor7.6percentsharplyupfrom2.9percent(madein

China)and2percent(Chinesebrands)in2020(ACEA,2024).Intermsoftotal(ICE+EV)carsales,battery-

electricvehiclesmadeinChinaandbyChinesebrandscorrespondtoabout3and1percent,respectively.Theaveragepurchasepriceofbattery-electricvehiclesintheEUaveraged46,000euros,morethantwicethe

averagepriceofthoseimportedfromChina.ChineseEVssoldinEuropearestillabout20percentcheaperthansimilarmodelsmadebyEuropeanmanufacturers.

1TheEY2023MobilityConsumerIndexsurveyshowsanincreaseinEV-buyingintentsince2020,albeitwithaplateaubetween2022and2023forthecaseoffully-electricvehicles.Someanalystshavepointedtoconcernsaboutcharginginfrastructure,largedepreciationrates,anduncertaintyaboutgovernmentpolicies(GoldmanSachs,2024).

5

Figure1.EVSalesandSizeofEurope’sAutomotiveSector

EU:BatteryEVSales

(Percentoftotalcarsales)

SizeoftheEUAutomotiveSector

(sectoralvalueaddedaspercentofGDP,2019)

1.4

1.2

1.0

0.8

0.6

0.4

0.2

0.0

China:ExportsofEVs

(Thousandsofcars,12-monthmovingaverage))

TotalValueAddedtoForeignAutoSector

(percentofdomesticGDP,2019)

wDEUWFRAWITA

BLRUKRHRVLVARUSESTTURLTUBGRROUPOLHUNSVNSVKCZE

Sources:CEIC;ChinaCustoms;IEA;EuropeanCommission;OECDInput-OutputTable;andIMFstaffcalculations.

Notes:ThesizeoftheEUautomotivesectoriscalculatedasthevalueaddedoftheautosectoraspercentofGDPusingtheOECDinput-outputtable.Totalvalueaddedtoforeignautosectorismeasuredasacountry’sinput(intermediategoodsandservices)totheautosectorofaforeigncountry(Germany,France,orItaly).

TheriseofChinaasaglobalEVexporterhasbeenasourceofconcernforEuropeanpolicymakersand

carmakers.TransportequipmentisEurope’slargestindustrialsector.Directandindirectemploymentbythe

automotivesectoraccountsforabout7percentoftotalEUemployment(ACEA,2023)anditsshareinGDP

rangesfrom4-5percentinCzechia,Slovakia,Hungary,andGermanytoaround0.5inFrance,Belgiumand

Bulgaria.Asaresultofdecadesofsupply-chaindeepening,itisalsoahighlyinterconnectedsector,with

Central,Eastern,andSoutheasternEuropean(CESEE)economiesaccountingforanontrivialshareofinputsintoautomobileproductionofGermany,FranceandItaly(EA3).PolicymakershavealreadybeenconcernedforsometimeabouthowemploymentinsomeregionsofEuropewouldbeaffectedbytheshifttowardsEV

production.ConcernsrelatedtoincreasedcompetitionfromChineseEVshavecomeontopofthisconcern—fueledbyperceptionsofunfaircompetition—andrevolvearoundEuropeancarfirms’competitivenessandthelabormarketimplicationsofreducedcarproductioninEurope.Inthiscontext,theEUinitiatedaninvestigationonsubsidizedEVsfromChina,whichhasledtotheintroductionofadditionalprovisionaltariffsonChineseEVimportsinJune2024.CombinedwithexistingEU(most-favorednation)tariffs,totaltariffscanreachalmost

50percentforsomeEVproducersbasedinChina.2

2Tariffswerecalculatedbasedonestimatesofhowmuchstateaideachfirmreceived,whilecompaniesthatcooperatedwiththeECprobesawtheirdutiescut.TariffsapplytoChinesefirmsandsubsidiariesofEUandU.S.firmsoperatingandexportingoutofChina.

6

DespiteconcernsaboutthepotentialwelfareimplicationsoftheshifttoEVsamidmoreintensecompetition,

therehavebeenfewquantitativeassessmentstodate.Thisisprimarilybecauseitisstilltooearlytoseesomeofthepotentialeffectsclearlyinthedata.Whilethismakesstructuralgeneralequilibriummodelsparticularlywellsuitedtoperformanalysesoftheirimplications,studiestodatehavemostlyfocusedonusingdescriptivestatisticsandhistoricalexperiencestocomeupwithpredictionsforfuturedevelopments(explainedinmore

detailbelow).Anexceptionisarecenttrademodel-basedanalysisbytheKielInstitute,whichshowsthe

medium-tolong-termtradeimpactsfromEUtariffsonChineseEVs.However,tothebestofourknowledge,thereisnocomprehensivemodel-basedanalysisthatcapturesboththeshort-termdynamicandsteadystateGDPeffectsofthedualshocks.

OurpaperaimstofillthisgapbyquantifyingthetradeoffsbetweentheshifttoEVsandkeyeconomic

outcomesandanalyzingwhichpoliciesmaysharpenoreasethem.Todoso,thepaperemploysstate-of-the-artmacroeconomicandtrademodels.First,weuseGIMF,amulti-region,micro-founded,dynamicgeneral

equilibriummodeloftheglobaleconomy,tosimulatetheshort-runimpactsofthedualshocksoftheEV

transitionandgrowingpenetrationofChineseEVimports(themodelisdescribedinKumhofandothers,2010;Andersonandothers,2013).Wealsouseadynamicmulti-country,multi-sectorquantitativetrademodelbasedonCuñatandZymek(2024)todescribethelong-runsteadystateeffectsatamoregranularlevel.WhileGIMFisrestrictedtoalimitednumberofsectorsandcountries/regions,thetrademodelallowsforanarbitrary

numberofcountry/regions.

EVsareanewtechnologythatisevolvingveryrapidly,andhenceitistooearlytopredictcountries’ultimatecomparativeadvantageswithanydegreeofcertainty.Forthisreason,webaseourmainscenarioonan

episodefromrecenthistorythatisconsideredtransformativefortheglobalautosector-theriseofJapan’sautosectorinthe1960–1980s.Amidhighenergyprices,smaller,morefuel-efficientJapanesecarsstartedtakinglargermarketsharesintheU.S.,eventuallypeakingataround15percentinthemid-80s.Thisrapid

penetrationcreatedtradetensionsthatresultedintheadoptionof“voluntaryexportrestraints.”Eventually,

JapanesecarmakersadaptedtothenewpolicyandtradeenvironmentbyincreasingFDIintheU.S.ThisledtoaperiodofdeclineandstabilizationinimportsharesoftheU.S.Basedonthoseinsights,wecalibrateourmodelssothatChinaachievesasimilarincreaseinmarketpenetrationasJapandidinthe80sbutovera

shortertimespanof5years—abouttwiceasfastasintheU.S.-Japanexperience.

AcrucialmethodologicalquestionishowtomodeltheriseofChineseEVmarketsharesinEurope.Thereare

severalwaysthiscanbedonebuttheexerciseisconstrainedbythestructuresofGIMF-GVCandthetrademodel.Bothmodelshaveasinglerepresentativeautomotivesectorsinceexistinginter-countryinput-outputdatadonotyetdistinguishbetweenICEandEVproduction.Tosidestepthisissue,weassumethati)

unobservedtous,theautomotivesectorcontainstwocartypes–ICEandEVs–withbroadlysimilar

productionstructures;andii)ChinaenjoysanemergingrelativeproductivityadvantageintheEVcartype.

Inpractice,thismeansthatourso-calledEV-shockscenariocombinestwoshocks.Thefirstisagenericsupplyshockthatincreasestotalfactorproductivity(TFP)inChina’sautomotivesectorasawhole.Initselfthisis

insufficientwithreasonableproductivitydifferentialstogeneratealargeenoughincreaseinChina’smarket

penetrationandtheenvisagedend-shareof15percentChinesemarketpenetrationover5years.Thesecondshockisapolicy-drivenshifttowardsEVsthatbenefitsdemandforChinesevehiclesdisproportionallyduetoanassumedcomparativeadvantagedinthe(notdirectlyobservable)EVtypeofcarsectoroutput.TheextentandpaceofChina’semergingcomparativeadvantageisassumedtobesuchastogeneratethe15percent-pointincreaseinChinesemarketshareover5years.Intermsofmacroeconomicimpacts,thisisobservationally

equivalenttoapreferenceshifttowardsChinesecar-sectoroutput.However,ourassumptionsaboutthe

7

distinctICEandEVvarietiesofthisoutputalsoallowustoexploretheemissionsimplicationsofdifferentEUresponsestotheEVshock.3

Inalloursimulations,weconsiderabaselinesteadystatewhereChina’sproductivitygrowthdoesnottake

placeandwheretheEUdoesnotintroduceanEVtransitiontarget(andthusconsumersdonotdevelopa

preferenceforChinesecars).Thisallowsustoquantifytheeffectsofbothshocks,namelythepolicy-driven

demandshockandtheChinaproductivityshock.Wethenconsidertheimpactofprotectionistpoliciesadoptedinresponsetothegrowingimportshares.Andfinally,welookathowEuropeaneconomiescouldbeaffectedbyafurtherscalingupofChineseFDIthatwouldleadto40percentofChineseEVssoldinEuropebeing

producedinEurope,similartoJapan’slate1980sexperienceintheU.S.

FortheEUasawhole,wefindthattheoutputcostofthetransitiontoEVsisnontrivialbutsmallintheshort-

term,withadeclineofabout¼percentinrealGDPformostcountriesover5years,andclosetozerooverthelongterm.WhiletheproductivityincreaseinChinabenefitsconsumersinallEUcountriesthroughcheapercarsandinputs,thedemandshiftawayfromICEvehiclesproducedinEuropetowardsChineseEVsnegatively

impactsoutput.However,thereissignificantheterogeneityacrosscountries.Lossesaremoresignificantforeconomiesheavilyreliantonthecarsector,mainlyinCentralEurope,asdemandfortheirinputswouldshrink

significantly.HungaryandCzechiaseea1percentand1.5percentdeclineinrealGDPover5years,

respectively,withthenegativeGDPimpactpersistinginthesteady-state.Ontheotherhand,EUeconomies

thatdonothaveasizableautoproductionsectorbenefitfromtheavailabilityofcheaperEVsimportedfrom

China.Resultsfrombothmodelspointtosomeemploymentlossesinthemotorvehiclesector,andtheneedforworkerstoshifttoothersectors,highlightingtheneedforpoliciestoeasethetransition.TariffsonChineseEVswoulddeepenthelossesandraisetheGDPcostoftheEVtransition,includingforthosecountriesheavilyreliantonautoproduction,whiletheirimpactonemissionswouldbegenerallymodest,providedthattheydo

notcausepolicytargetstobepostponed.AnincreaseinChineseFDIinflowsthatresultsinasignificantshareofChineseEVsbeingproducedinEurope,ontheotherhand,wouldhelptheeconomiesreceivingtheFDI.

Effectscanbeparticularlylargeforsmaller(CentralEuropean)economiesshouldadditionalFDIflowsgodisproportionatelytothem.

Ourpapercontributestoseveralstrandsofliterature.First,itcomplementsexistingstudiesontheimpactofthestructuraltransformationimpliedbythetransitiontoEVs,includingduetointensifyingcompetitionfromChina.Thosestudies,conductedbypolicyinstitutionsandautomotiveindustryassociations,havegenerallyfollowedamostlydescriptiveapproach,oftenrelyingonsimplepartial-equilibriumsimulations(e.g.,Duthoit,2023;Mayerandothers,2024,Sebastianandothers,2024).Closesttoourwork,recentsimulationsbytheKielInstitutefortheWorldEconomyuseitstrademodel(KITE)toshedlightonthelong-termimplicationsoftariffsonChineseEVimportsonbilateraltradeandproductioninEurope.Likeus,theyfindthatsuchtariffswouldleadtoa

significantdecreaseinChineseimportsandhigherpricesforend-consumers.OurpaperaddstotheanalysisoftradepatternsandoftheGDP,employment,andclimate-transitionimplicationsoftariffsaswellasFDI

scenariosusingmultiplemodels.4Anotherrelevantmodel-basedpaperisAyerstandNoumon(2023)whoinvestigatetheimpactofelectrificationonCzechiawithastructuralmodelofglobalvaluechains,butdonotconsidertheimpactofrisingcompetitionfromChina.Theyshowthatthetransitioncouldbechallengingfor

3Whileobservationallyequivalenttoapreferenceshock,welabelthisapolicy-drivendemandshiftgiventhatthetransitionpathtoachievethe2035targetisparticularlysteepandthereforearguablyunlikelytobeachievedintheabsenceofpolicymeasurestopromoteEVadoption.

4Kiel’sKITEmodelisbasedonthewidelyusedstaticmulti-country,multi-sectorquantitativetrademodelinCaliendoandParro

(2015).Thetwomodelswedeployhaveabroadlysimilarproductionandtradestructurebutaredynamic,withendogenouscapitalaccumulationandinternationalassettrade.

8

Czechia,leadingtoamodestincreaseinoutputbutlargelossesofemploymentgivenadecreaseinthelaborintensityofproduction.OurpaperisalsorelatedtoabodyofworkstudyingtheroleofEurope’sautomotivesectorinmacroeconomicperformanceandhighlightingtheimportantroleofsupplychainintegrationinshocktransmission(Boranovaandothers,2022;ElekdagandMuir,2013;andHuidromandothers,2019).AsetofrelatedpapershasalsofocusedonhowChina’sdominanceinEVshasbeensupportedbysupply-side

policies,withthesectorbeingamongtheemergingsectorsfavoredbyindustrialpolicies(seeIMF,2024;RotunnoandRuta,2024).Inthiscontext,Attinasiandothers(2024)simulateascenariowhereChina

subsidizesEVssuchthattheirpricesdropby50percent,leadingtolargeshiftsinglobalEVmarketsharesandasmall,0.1percentdropinoverallEUproduction.5

Ourpapercomplementsthegrowingliteratureonthepotentialeconomicimpactsofthegreentransition,

includingitspotentialemploymentshifts(IMF2022a;IMF,2022b;Bluedornandothers,2022).Inlinewithourfindings,thesestudiesconfirmthatwiththerightpolicies,outputlossesassociatedwiththetransitioncan

remainmanageableandarelikelydwarfedbythelong-termcostsofinaction.However,theypointtosome

adverseconsequencesforworkersinaffectedsectors.Notably,forEurope,Celasunandothers(2023)

examinethelabormarketimplicationsofelectrificationinthecarindustryusingtheheterogeneityacross

EuropeancountriesinthespeedoftransitiontoEVproductionandvariationinsectoralandregionalexposuretotheautomotivesector.Theyfindthatthetransformationoftheautosectorisalreadyhavinganadverse

impactonemploymentintheaffectedsectorsandregions,andprovideevidencethatactivelabormarketpoliciescanbeeffectiveineasingthetransition.

Theremainderofthepaperisorganizedasfollows.Toanchorourmodelingscenarios,Section2first

documentskeyfactsabouttheJapaneseexperienceinthe1960-80period,andhowthiscomparestoChina’srisetoday.Section3laysoutthemodelsandscenariosused,whileSection4presentsthemodelresults.

Section5concludes.

2.Lettingthepastandthepresentinformpossiblescenarios

OurmodelscenariosrequireustotakeastanceontheevolutionandextentofChina’sproductionadvantageinelectricvehicles.Sincethiscannotbeascertainedwithconfidenceatthispoint,weturntoahistoricalepisodeasourbenchmark,namelyJapan'sentryintotheU.S.carmarket.InthissectionwefirstdocumentthespeedandextentofJapan’sriseinthe1960–1980sasaglobalautomotiveindustryplayerusingglobalinput-outputdata.WethenturntothepresentandhighlightparallelswithChina’srisingroleasakeyEVmanufactureras

wellasrecentEUpolicyresponses.Finally,webringthetwotogethertocomparethepastandpresentandtherebyinformpossiblemodelscenarios.

5Alochet(2023)andBarwickandothers(forthcoming)notethatChinaactuallyphasedoutmanyofitscentral-governmentsubsidiestotheEVsectorin2023.Moregenerally,Barwickandothers(forthcoming)findthatconsumersubsidiessignificantlyincreasedEVsalesinChina,withpositiveeffectsinChinaandelsewherethankstolearningbydoinginbatterymanufacturing.Localcontent

requirements,however,reducethesebenefitsbyshiftingbatterymanufacturingtolessefficientproducers.

2.1.JAPAN’SRISEINTHE1960–1980s

9

sufferedfrominsufficientdealernetworks,poormodelimage,andcompetitionfromEuropeanfirms(Hart,1992).Itwasnotuntilthe1970sthatpenetrationin

foreignmarketsincreased,withthesurgeinoilpricesandtighteningemissionsregulationscreatingalargedemandforsmallandfuel-efficientcarsthatwas

unmetbyAmericanandEuropeanfirms.TheU.S.

onlystartedimplementingrestrictionstocurb

Japanesecarimportsintheearly1980s.Asaresult,JapaneseautoexportstotheU.S.rapidlyincreasedduringthisdecade.Bytheendofthe1970s,growingAmericanimportsofJapaneseautosamidoilpriceincreasescreatedatradedisputethatledtothe

adoptionofvoluntaryexportrestraintsthatlimited

JapaneseautoexportvolumestotheU.S.Startinginthe1980s,JapanesefirmsdevelopedregionalizationstrategiesthroughFDItodefusetradetensionsandoffsettheappreciationoftheyen,andexportsbegantodiminish(Lin,1994).

ThepostwarJapaneseautoindustryunderwentthreestagesofdevelopment:rapiddomesticexpansionduringthe1960s,export-ledgrowthduringthe1970s,andregionalizationthroughFDIsincetheearly1980s.AnnexIprovidesadetailedreviewoftheliteraturedocumentingJapan’srise.Japanesefirmsstartedenteringtheworldexportmarketinthe1960sbutwereinitiallyunsuccessful.IntheU.S.,theirlargestpotentialmarket,they

Figure2.U.S.PassengerCarMarketShare

(percent)

Sources:WorldInput-OutputDatabase(WIOD);andIMFstaffcalculations.

Thesedifferentphasescanbeobservedinlong-runinput-outputdata.WhilehistoricaldataonU.S.marketsharesofforeignproducersarenotreadilyavailableatadisaggregatedlevel,themarketshareofaforeigncountrycanbeapproximatedbytheratioofitstransportequipmentsector'ssalestoU.S.finaldemandovertotaltransportequipmentsalesintheU.S.Suchdataareavailableinthelong-runWorldInput-Output

Database(Woltjeretal.,2021).Figure2showsthattheshareofimportedJapanesecarsinU.S.salesrose

fromcloseto0in1965to15percentin1985,andtheneventuallyfellasJapaneseproducersswitchedtowardssupplyingtheU.S.marketviaproductionintheUS.

2.2.CHINA’SRISEINTHE21STCENTURY

ChinesedomesticsalesofEVstookoffinearnestin2020(Figure3,leftpanel).Byearly2024,EVsmadeuparound32percentoftotalsalesinChina,withpure-electricvehiclesaccountingfor22percentandplug-in

electricstheremaining10percent.Whileexportsofhybridvehiclesremainmodest,pure-electricvehicle

exportsaremoresignificant.In2023,around1.5millionpure-electricvehicleswereexported,comparedto5.4millionsuchvehiclessolddomestically(pureelectriccarsalesgloballyamountedtoabout10millioncars,IEA,2024).

LaborproductivityinChina’sautosectorhasbeengrowingatasimilarpaceasinothermanufacturingsectors,significantlyfasterthanlaborproductivitygrowthintheautosectorsoftheU.S.andGermany.TheshifttoEVsdoesnotappeartohavealteredthissectoralgrowthpattern(Figure3,rightpanel).Between2015and2023,laborproductivityinChina’saut